LOS ANGELES -- Startup automaker Next Autoworks will close its San Diego headquarters, cut staff and consolidate into its suburban Detroit technical center after failing last month to secure a $320 million government loan, its CEO says.
Next Autoworks had sought the funds from a U.S. Department of Energy loan program to help launch production of a low-cost, efficient small car at a former General Motors plant in Monroe, La. The company withdrew its application after learning that it would not be approved because of "political and credit-risk concerns" surrounding startup companies, according to a company statement issued last month.
The Department of Energy denied an earlier loan application from the company in March 2010.
"Due to the Department of Energy declining our loan application, we have found it necessary to restructure our operations and evaluate strategic alternatives for our company," Kathleen Ligocki, CEO of Next Autoworks, said in a statement to Automotive News.
Next Autoworks is the second fledgling automaker to announce that its business plans were hampered by a lack of funding. Carlsbad, Calif.-based Aptera Motors said Dec. 2 that it would liquidate after failing to secure private-sector funding to begin production of a midsized electric sedan. Aptera had also applied for a Department of Energy loan.
Next Autoworks had early success in securing funds from big names in the venture capital world including Kleiner Perkins Caufield & Byers, Google Ventures and T. Boone Pickens.
Ligocki said the company's board has approved bridge funding as it continues to talk to additional potential investors.
"We continue to talk to various investors interested in the innovative product design, low cost manufacturing approach and strong supplier relationships the company has developed," Ligocki said in her statement.
Ligocki, a former executive with Ford Motor Co. and GM, and a former CEO of supplier Tower Automotive, joined Next Autoworks in October 2010. She helped bring credibility to the firm as it worked to line up suppliers for its fuel efficient small car designed to cost thousands of dollars less than subcompact cars from mainstream automakers.